Exploring Macroeconomics
7th Edition
ISBN: 9781285859446
Author: Sexton, Robert L.
Publisher: Cengage Learning
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Chapter 19, Problem 6P
To determine
(a)
To explain:
The effect of both unanticipated and anticipated effect of
To determine
(b)
To explain:
The effect of both unanticipated and anticipated effect of monetary policy on unemployment when the Federal Reserve Bank conducts an open market sale.
To determine
(c)
To explain:
The effect of both unanticipated and anticipated effect of monetary policy on unemployment when the
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How does an increase in money supply lin an economy lead to demand-pull inflation?
Which of the following monetary policy action is intended to
reduce inflation?
Select one:
a. Lowering of the discount rate
b. None of the above
Oc. Sale of government securities such as Treasury bonds
O d. Lowering of reserve ratio
O e. Reduce the interest rate on excess reserves
How do you know if the Fed's actions achieve the goal of stable prices?
The goal of stable prices is achieved when _______.
A.
the prices of food, clothing, and shelter are stable
B.
the PCEPI inflation rate excluding food and energy prices is 2 percent a year
C.
the general level of prices is changing, but we can accurately predict the rate of change
D.
the inflation rate is zero percent a year
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- 1. What are the requirements for a sound financial system? 2. The great economist Milton Friedman has said that “inflation is always and everywhere a monetary phenomenon." Explain. 3. Would a peso today be worth more to you than a peso tomorrow? 4. Is inflation necessarily always a bad thing? 5. How do the disinflationary policies differ depending on the causes of inflation? 6. How does an increase in interest rates affect business? Consumers? 7. In what way can inflation distort purchasing power over time for individuals? 8. From Mishkin (2018), pp. 46: Some economists suspect that one of the reasons economies in developing countries grow so slowly is that they do not have well - developed financial markets. Does this argument make sense? 9. From Mishkin (2018), pp. 47: How do conflicts of interest make the asymmetric information problem worse? 10. From Mishkin (2018), pp. 60: In person, cigarettes are sometimes used among inmates as a form of payment. How is it possible for…arrow_forwardQ. Explain why economists consider inflation at too high a level to be a bad thing.arrow_forwardOn which of the following do monetarists and Keynesians disagree? A. Deflation causes unemployment B. Wages are sticky C. High inflation leads to misallocation of resources D. In the short run, an increase in the money supply boosts economic output E. C and Darrow_forward
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